| Year | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| IC | 100 | 70 | 50 | 35 | 0 |
| Income | 0 | 20 | 30 | 20 | 5 |
Kerry Back
BUSI 721, Fall 2022
JGSB, Rice University
| Year | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| Invested capital | 100 | 70 | 50 | 35 | 0 |
| Income | 0 | 20 | 30 | 20 | 5 |
| Year | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| Income | 0 | 20 | 30 | 20 | 5 |
| Change in invested capital | 100 | -30 | -20 | -15 | -35 |
| Cash flow | -100 | 50 | 50 | 35 | 40 |
| Year | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| IC | 100 | 70 | 50 | 35 | 0 |
| Income | 0 | 20 | 30 | 20 | 5 |
df["Change in IC"] = df.IC.diff()
df["Change in IC"].iloc[0] = df["IC"].iloc[0]
df["Cash flow"] = df.Income - df["Change in IC"]
df.T| Year | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| IC | 100.0 | 70.0 | 50.0 | 35.0 | 0.0 |
| Income | 0.0 | 20.0 | 30.0 | 20.0 | 5.0 |
| Change in IC | 100.0 | -30.0 | -20.0 | -15.0 | -35.0 |
| Cash flow | -100.0 | 50.0 | 50.0 | 35.0 | 40.0 |
cost_capital = 0.1
df["PV factor"] = 1 / (1+cost_capital)**df.index
df["PV of cash flow"] = df["Cash flow"] * df["PV Factor"]
df["NPV"] = np.nan
df["NPV"].iloc[0] = df["PV of cash flow"].sum()
df[["Cash flow", "PV factor", "PV of cash flow", "NPV"]].T| Year | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| Cash flow | -100.00 | 50.00 | 50.00 | 35.00 | 40.00 |
| PV factor | 1.00 | 0.91 | 0.83 | 0.75 | 0.68 |
| PV of cash flow | -100.00 | 45.45 | 41.32 | 26.30 | 27.32 |
| NPV | 40.39 | NaN | NaN | NaN | NaN |